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Utilities Face Billions In Losses From Distributed Renewables

Posted by Soulskill on from the reacting-slowly-to-new-technology-is-not-a-business-plan dept.

Lucas123 writes: Over the next 10 years, adoption of distributed power in the form of renewables such as solar power has the potential to reduce revenues to grid utilities by as much as $48 billion in the U.S. and by $75 billion in Europe, according to a new study. The study, by Accenture, revealed that utility executives are more nervous (PDF) about the impact of distributed — or locally generated renewable power — than ever before. 61% of those surveyed this year indicated they expect significant or moderate revenue reductions compared to only 43% last year. The cost of rooftop solar-powered electricity will be on par with prices for common coal or oil-powered generation in two years, and the technology to produce it will only get cheaper, according to a recent report from Deutsche Bank. New technologies, such as more efficient solar cells, are also threatening to increase efficiencies and drive adoption.

8 of 280 comments (clear)

  1. Reduced revenues != lost profit by BarbaraHudson · · Score: 3, Informative

    reduce revenues to grid utilities

    And there are costs associated with generating those revenues (pun intended). Will it tip the utilities into loss? Certainly not to the extent the summary implies.

    --
    "Transparent" is a shit show that trades on every stereotype going. A man in drag is NOT a transsexual.
    1. Re:Reduced revenues != lost profit by rahvin112 · · Score: 4, Informative

      Utilities are regulated monopolies when selling to residential consumers. They are forced to sell at fixed power rates that don't vary with demand. Business power though is mostly unregulated. Companies pay for power at different rates every hour. Night time is very cheap but daytime power can be very expensive for a company. Utilities make the bulk of their profit on business power. Solar is going to be pushing power into the grid at peak amounts when peak commercial use is on. This is going to drive down peak power pricing dramatically and may actually flip it to nighttime. So rather than charging a business .30 kwh from 2-5pm with their 10% margin on top is going to get reduced significantly and could even go negative which will wipe out commercial profits almost entirely.

      That's what they fear more than anything. If they end up as a company that only makes money on the grid maintenance and not power they won't be worth 10% of what they are today.

    2. Re:Reduced revenues != lost profit by fluffy99 · · Score: 3, Informative

      The graphs in the study are not scaled properly and are misleading. The middle US case, which even has some dubious assumptions, only represents a 5% drop in total demand. It doesn't include important things such as costs to increase capacity if demand actually continues to rise. Most predictions show a continued overall energy demand far greater than predicted to be generated by wind or solar. Status quo of a non-increasing demand is actually good for their profits as they just need to maintain what they have. Solar power which produces during the peak energy hours helps them as well since the peak surges are covered using gas turbines which are very expensive to run (hence the reason for tiered pricing based on time of usage)

    3. Re:Reduced revenues != lost profit by K.+S.+Kyosuke · · Score: 3, Informative

      20%. Not 50%. 50% cost reduction for twice the installed capacity would mean a solar panel singularity or something like that. :-)

      --
      Ezekiel 23:20
    4. Re:Reduced revenues != lost profit by K.+S.+Kyosuke · · Score: 3, Informative

      2. Another big cost is base load generating capacity. Base load is priced assuming it will run 24/7. But if solar can supply 100% of power on a sunny day, then the base load generator will be sitting idle.

      Assuming there will be many base load generators at that point in time... Much has been made of the fact the Germans started building new coal plants like crazy, but what gets ignored by conservatives (in the general meaning of the word) is that these are "flex-load" plants, with the old base-load coal plants are being closed down.

      --
      Ezekiel 23:20
    5. Re: Reduced revenues != lost profit by jklovanc · · Score: 3, Informative

      Do you watch use your computer after dark? There is 400 watts. Watch TV? Do laundry? cook? Run your refrigerator? Have a shower? You numbers are very far off.

  2. Uh, no. by goodmanj · · Score: 2, Informative

    Guys, "lost revenue" is not the same as "loss". If I buy widgets for 99 cents and sell them for a buck, and my customers start buying fewer widgets, I'm not losing $1 for each widget they fail to buy from me, but that's exactly what the paper is suggesting.

    Now, if my customers can make their own widgets and force me to buy them for $1 (as some states require utilities to do), I can claim that I'm losing money on that deal. But my losses are a penny a widget, not a buck.

  3. Re: Predictions by Code+Herder · · Score: 5, Informative

    That's amusing, I assume you don't know much about your marxist neighbor in the north, that is Canada. For example Hydro Quebec, which has been nationalized since 1944 has been a great success: http://en.wikipedia.org/wiki/H.... We have some of the cheapest residential power in North America AND we're making a tidy profit selling our fairly important over capacity to our neighbors in the states: http://www.hydroquebec.com/pub...

    On behalf of Canada, I apologize for destroying all your capitalists wet dreams with our mixed economy. Sorry, sorry!